NGPF Tax Certification

Filing Status

A category that defines the type of tax return an individual will use, primarily based on marital status; it also determines the size of your tax brackets and how much of your income is taxed at each rate

Paycheck Stub

A document attached to every paycheck that details your earnings and the amount withheld for taxes, health insurance, retirement funds, etc.

Federal Insurance Contributions Act (FICA)

A federal law that requires an employer to withhold taxes from the wages they pay their employees; the funds go toward Social Security and Medicare

Social Security

A federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals

W-4

A form completed by an employee to indicate his or her tax situation (exemptions, marital status, etc.) to the employer, who then withholds the corresponding amount of taxes from each paycheck

Medicare

A government-run insurance program that provides healthcare assistance to elderly and disabled Americans

Medicaid

A government-run insurance program that provides healthcare assistance to low income Americans

Corporate Income Tax

A percentage of profits paid by a business to the federal and state government

Tax Bracket

A range of income amounts that are taxed at a particular rate

Standard Deduction

A standardized dollar amount that reduces your taxable income, specifically for individuals who do not receive additional benefit by itemizing their deductions into medical expenses, donations, etc.

Excise Tax

A tax paid on purchases of a specific good, like gasoline or cigarettes

Progressive Tax

A tax system that uses tax brackets to collect a larger percentage from the income of high-income earners than it does from low-income earners

W-9

An Internal Revenue Service form which is used to confirm a person's taxpayer identification number (TIN)

Tax Credits

An amount of money that taxpayers can subtract from taxes owed to their government. Unlike deductions and exemptions, which reduce the amount of taxable income, tax credits reduce the actual amount of tax owed.

Audit

An inspection of a filer's tax return by the IRS

Above the line deductions

Deductions for adjusted gross income, also known as adjustments to income.

Allowances

Employee-claimed exemptions on the W-4 to determine how much of an employee's pay to withhold from his or her paycheck for taxes

Payroll Tax

Federal and state taxes that all employers must pay, based on a percentage of the employee's salary, toward social services such as Social Security and Medicare

W-2

Form that an employer must send to an employee and the IRS at the end of the year to report the employee's annual wages and taxes withheld from their paycheck

I-9

Form used by an employer to verify an employee's identity and to establish that the worker is eligible to accept employment in the United States

Interest Income

Income earned through interest on savings accounts, bonds, CDs, etc.

1099-NEC

It is made to someone who is not your employee for services in the course of your trade or business made to an individual, partnership, estate, or, in some cases, a corporation and the payments made to that payee were at least $600 or more for the year.

Tax Deductions

Lowers a person's tax liability by lowering their taxable income. Deductions are typically expenses that the taxpayer incurs during the year that can be applied against or subtracted from their gross income in order to figure out how much tax is owed.

Dividend

Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis

Capital Gain

Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for

1099-INT

Received in January; brokerage firms, banks, mutual funds, and other financial institutions are required to file this on interest over $10 paid during the year. The form must be reported to the IRS and sent to each interest recipient by Jan. 31.

Dependent

Someone you financially support who can be "claimed" on a tax return to reduce your taxable income and lower your taxes

Discretionary Spending

Spending by the federal government determined by legislative action and approved through votes by elected officials

Mandatory Spending

Spending by the federal government required by previously existing laws, including funding programs like Social Security and Medicare/Medicaid

Income Tax

Taxes paid by employees to federal and state government through a direct deduction from their paycheck

Effective Tax Rate

The actual rate you pay on your taxes, as a percentage of your overall income

Taxable Income

The amount of income that is used to calculate an individual's or a company's income tax due

OASDI (Old Age, Survivors, and Disability Insurance)

The federal Old-Age, Survivors, and Disability Insurance (OASDI) program is the official name for Social Security in the United States.

Tax Rate

The percentage at which taxes are paid on each dollar of income

Withholding

The portion of an employee's wages that is not included in their paycheck because it goes directly to federal, state and local taxes

Exemption

The set amount of money, per dependent, you can subtract from your taxable income

1040

The standard Internal Revenue Service (IRS) form that individuals can use to file their annual income tax returns

Marginal Tax Rate

The tax bracket that your highest dollar of income falls into, and therefore the highest tax rate you pay

Adjustable Gross Income (AGI)

a measure of income calculated from your gross income and used to determine how much of your income is taxable.

Itemized deductions (below the line deductions)

expenses you can subtract from adjusted gross income to determine your taxable income